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At Long Last and Now What?

9/4/2009 12:00 AM

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At Long Last and Now What?

WTO rules against Airbus, cites harm to Boeing.

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September 4, 2009—The World Trade Organization on Friday turned over—to US and European diplomats—its decision in a five-year-old case that pitted French-based Airbus against US-based Boeing and spilled over into the US Air Force's KC-X tanker program.

The US had complained that European governments provided subsidies to Airbus, giving it an unfair advantage in the world aviation market, and, according to US Rep. Norm Dicks (D-Wash.), the WTO has agreed.

In a Sept. 4 statement, Dicks said, "The ruling is encouraging, noting that all Airbus aircraft have received illegal subsidies and that these have caused material harm to Boeing."

That decision would appear to bolster Boeing's bid for the USAF tanker program, which initially lost out to rival team Northrop Grumman and EADS, parent to Airbus.

However, the Associate Press reports that the WTO will not decide a counter-complaint that says Boeing received similar subsidies for another six months, and at least one analyst told AP that the second ruling likely would favor Airbus. If true, these two rulings could offset.

In the meantime, The Hillreports that US Defense Secretary Robert Gates is poised this week to provide a new KC-X tanker draft request for proposals to lawmakers before putting the RFP on the street.

Although Pentagon officials have said that the WTO case has no bearing on its decision process, lawmakers have disagreed—forming up on both sides of the issue.

Dicks now maintains that it "would be inconceivable" for the Pentagon to ignore the WTO ruling.